STOCK PURCHASE AGREEMENT
This Agreement is made as of October 10, 1997, by and
between PCH Investments, LLC, a California limited liability company,
("Buyer"), and Trefoil Capital Investors, L.P., a Delaware limited
partnership ("Seller").
WHEREAS, Seller owns beneficially and of record
1,161,337 shares of Series B Convertible Preferred Stock (the
"Series B Stock") and 1,000,000 shares of Common Stock of L.A.
Gear, Inc. (the "Company"); and
WHEREAS, Seller desires to sell and Buyer desires to
buy 1,140,356 shares of the Series B Stock (the "Shares");
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, the parties hereby
agree as follows:
1. Sale and Purchase of Shares. On the date of this
Agreement, Seller hereby sells and Buyer hereby purchases the
Shares. Buyer shall pay Seller $230,000 in cash, or by
cashier's check, and Seller shall deliver to Buyer certificates
representing the Shares, which certificates shall be either
endorsed in blank or accompanied by a duly executed stock
assignment form, with the signature of Seller guaranteed by a
bank or a member of the New York Stock Exchange.
2. Seller's Representations. Seller hereby
represents to Buyer that:
(a) Seller is a duly and validly existing limited
partnership, and has all necessary power and authority to enter
into this Agreement and to sell, assign, transfer and deliver to
Buyer the Shares and the shares subject to the option described in
Section 5 (the "Optioned Shares");
(b) The execution and delivery of this Agreement
by Seller, the performance by Seller of its obligations hereunder
and a consummation by Seller of the transactions contemplated
hereby have been duly and validly authorized by Seller and the
general partner of Seller and no other approval or authorization
on the part of Seller and no other person or entity is necessary
for the execution and delivery of this Agreement by Seller, the
performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
(c) No filing or registration with, no notice to
and no permit, authorization, consent or approval of any public
or governmental body or authority, or any third party, is
necessary for the consummation by Seller of the transactions
contemplated by this Agreement.
(d) This Agreement is a legal, valid and binding
agreement of Seller, enforceable against Seller in accordance
with its terms except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court
of equity.
(e) Neither the execution and delivery of this
Agreement by Seller nor the performance by Seller of its
obligations hereunder or the consummation of the transactions
contemplated hereby will constitute a violation of, conflict
with, or result in a default (or give rise to any right of
termination, cancellation or acceleration) under, any note, bond,
mortgage, indenture, license, contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which
Seller is a party or by which Seller or its properties or assets
is bound, or any judgment, decree, order, injunction, statute,
rule or regulation applicable to Seller or any of its assets or
properties.
(f) Seller is the record and beneficial owner of
the Shares and the Optioned Shares, free and clear of all liens,
claims, encumbrances and security interests of any kind.
(g) The delivery of the certificates for the
Shares and the Optioned Shares to Buyer pursuant to the provisions
of this Agreement will transfer to Buyer good and valid title to the
Shares and the Optioned Shares, free and clear of all liens, claims,
encumbrances and security interests of any kind other than those
created by Buyer.
(h) Seller has delivered to Buyer true and
correct copies of the Indenture dated as of December 24, 1992
between the Company and Chemical Trust Company of California with
respect to the Company's 73/4% Convertible Subordinated
Debentures due 2002, and the Loan and Security Agreement between
L.A. Gear California, Inc. and Congress Financial Corporation
(Western) (the "Loan Agreement").
(i) The Series B Stock represents all of the
outstanding preferred stock of the Company.
(j) The shares of the Company's Preferred Stock
and Common Stock referred to in the first Whereas of this
Agreement are all of the shares of the Company's stock that are
owned by either Seller or its general partner.
3. Buyer's Representations. Buyer hereby represents
to Seller that:
(a) Buyer does not own any shares of Common Stock
or Preferred Stock of the Company.
(b) Buyer shall use its best efforts to cause the
Company to continue its director and officer insurance ("D&O
Insurance") and to cause any D&O Insurance obtained by the
Company to continue to insure the directors and officers of the
Company on the date of this Agreement (the "Current Directors and
Officers") so that the Current Directors and Officers are covered
by D&O Insurance for all periods they served as directors and
officers of the Company, with coverage limits at least as
extensive as the D&O Insurance in effect as of the date hereof,
and shall otherwise cover the Current Directors and Officers with
such D&O Insurance in the same manner and to the same extent as
the then existing officers and directors.
(c) Buyer has received preliminary results of the Company's
third quarter of fiscal year 1997 and information on the effect such results
may have upon the Company.
4. Sophisticated Parties; Absence of Representations
and Warranties Concerning Company.
Buyer and Seller each acknowledge that they may have
material non-public information about the Company that has not
been disclosed to the other party. Each of Buyer and Seller
acknowledges that the other party shall have no liability for the
non-disclosure of such information. Buyer acknowledges that it
is a sophisticated investor able to analyze the Company and its
financial condition and results and is relying on its own
investigation and not on any representations or warranties of
Seller concerning the financial condition, operations, business
or prospects of the Company.
5. Option. Seller hereby grants Buyer the option to
acquire the remaining 20,981 shares of Series B Stock and the 1,000,000
shares of the Company's Common Stock (each as adjusted for any stock
splits, combinations and the like) that Seller owns for $20,000. This
option may be exercised at any time prior to April 15, 1998; provided
that Buyer agrees that it will not exercise the option if such exercise
would give rise to a default of or a violation under the Loan Agreement.
Buyer shall give Seller five business days' notice of its intention to
exercise this option. On the fifth business day after such notice,
delivery of the Optioned Shares and the payment of the price shall occur
at the principal offices of the Company in the manner described in the
second sentence of Paragraph 1 above.
6. Further Agreements.
(a) The respective representations and warranties of Seller
and Buyer contained herein or in any certificates or other documents delivered
with this Agreement shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Each and every such representation and
warranty shall survive the date of this Agreement indefinitely.
(b) Seller agrees to indemnify, reimburse,
defend, and hold harmless the Buyer and its officers, directors,
partners, representatives and successors in interest
("Indemnified Parties") for, from, and against all demands,
claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including without
limitation, interest, penalties, reasonable attorneys' fees,
disbursements, and expenses, asserted against, resulting to,
imposed on, or incurred by the Indemnified Parties (directly or
indirectly) in connection with, attributable to, resulting from,
or caused by any misrepresentation or inaccuracy in or breach of,
any of Seller's representations or warranties in this Agreement.
The maximum liability of Seller under this Section 5 shall be
$250,000.
7. Miscellaneous.
(a) This Agreement contains the complete
agreement among the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements and
understandings among the parties with respect to such
transactions. Section and other headings are for reference
purposes only and shall not affect the interpretation or
construction of this Agreement. The parties hereby have not
made any representation or warranty except as expressly set forth
in this Agreement.
(b) This agreement may be executed in
counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall
constitute only one original.
(c) This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure
to the benefit of the parties hereto and their heirs, personal
representatives, successors, and assigns.
(d) This Agreement shall be construed and
enforced in accordance with the laws of the State of California.
(e) This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the party
or parties against which enforcement, modification or
supplementation of the Agreement is sought.
(f) Each party's obligations under this Agreement
are unique. If any party should default in its or his obligations
under this Agreement, the parties each acknowledge
that it would be extremely impracticable to measure the resulting
damages; accordingly, the nondefaulting party, in addition to any
other available rights or remedies, may xxx in equity for
specific performance, and the parties each expressly waive the
defense that a remedy in damages will be adequate, provided
neither party shall be entitled to recover consequential or
special damages.
(g) Neither Seller nor Buyer shall make or issue,
or cause to be made or issued, any public announcement or
written statement concerning this Agreement.
PCH INVESTMENTS, LLC
By:________________________________
Its:_______________________________
TREFOIL CAPITAL INVESTORS, L.P.
By: Trefoil Investors, Inc.
Its: General Partner
By:____________________________
